How to Get Your Estate Plan Started

Estate planning involves deciding what you want to occur when you die and which of your trusted contacts may be empowered to manage those assets when you aren’t here. However, there are many misconceptions about estate planning, reports a recent article from Kiplinger, “It’s Estate Planning Week: Here’s How to Get Started.” Let’s set the record straight.

An estate plan can be as complicated or simple as you wish. For some, an estate plan may require a last will and testament to describe how you want your assets distributed upon death. If you have a large estate with many assets and complex goals, you could use a trust or a combination of trusts to administer assets after death.

For example, if you want to leave money for grandchildren but don’t want them to be able to access the funds until they reach a certain age or milestone, you could have a specific trust created for each beneficiary with descriptive language to explain what has to happen before the assets are distributed.

For married spouses, an estate plan typically leaves the assets to the surviving spouse and then, at the second spouse’s passing, includes instructions on who receives the assets. If there are no children, or you don’t want family members to inherit assets, you can use your estate plan to designate a charity or charities to receive gifts of cash or other assets.

Creating an estate plan involves creating an up-to-date balance sheet listing assets. How much you leave to heirs depends on whether you’ve spent your assets before you die or have significant liabilities.

You’ll need to name trustees to manage the assets if you establish trusts. You’ll also want to name successor trustees who can take over if the original trustee cannot serve. Talk with your trustees and successor trustees to be sure they are willing to take on the responsibility, since they will be in charge of the assets and need to make important financial decisions.

If your estate plan relies on a last will, you’ll need to name an executor who manages the estate, distributes assets, pays taxes and more. This person should be someone you trust implicitly. If you fail to name an executor, the court may appoint a representative.

An estate planning attorney will be familiar with any state-specific estate tax issues as well as federal estate tax issues. You’ll want to include your financial advisor and CPA to ensure that the estate plan works with all aspects of your life.

The estate plan isn’t completed until all documents have been signed and notarized and all assets are titled correctly. If assets are to be placed in a trust, your estate planning attorney will help you title assets to be sure the trust owns them and not your estate. If assets aren’t re-titled correctly, you may lose the benefit of the estate planning process. Check-in with your estate planning attorney every three to five years to be sure your estate plan still works. Family relationships and tax laws change, so estate plans need to be reviewed regularly. For example, the current federal estate tax exemption is $12.92 million for an individual, but unless Congress acts, this will sunset in 2025, when the exemption will revert to $5 million per person.

Reference: Kiplinger (Oct. 16, 2023) “It’s Estate Planning Week: Here’s How to Get Started”

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